how certain populations and building types impact a building's operation. as you can see there, predicted in 2017 with the 1400 units, the total for the program will be $17.1 million. in 2017, along with the service funding of $6.4 million, the total losp program funding will be $17 million, and this will be spent to provide nearly 1500 units of housing for formerly homeless persons. studies have shown that the care of these individuals and families in emergency-room services and confirmation for other public systems that support would be far greater. for this reason, we believe this

operating subsidy program is a cost effective, efficient way to deliver housing and services to san francisco homeless populations. then i have a couple of slides of projects we have done. this is 10th and mission, the family housing that was sponsored by mercy. this is paul street senior housing, which is also a mixed building -- polk street senior housing. targeted to the chronically homeless. this ends the staff presentation for the local operating subsidy program, and it should have added at the beginning that we have staff from dph and hsa here to answer any questions you might have, as well as the sponsor from mercy housing.

and like to give you a few facts about the arlington. the request is for $9,354,007 for the local operating subsidy which is the operating contract that will carry the project through for 16 years. mercy housing is the sponsor and will own and manage it. construction completed -- will be completed in september of this year. after construction, there will be 153 units. each unit will have a bath and a micro refreshments center. starting with 80 units in 2012 and working up to 129 units over time, the additional unit24 will be subsidized by another dph funding source. tenants will be homeless

individuals referred by the program who are high users of the public health system who may be mentally ill, a chronic substance abusers, and/or living with hiv or other disabling medical illnesses. this is just to tell you that this project was able to leverage $10 million in state funding, $12 million in federal funds, and another $840,000 in ahp funds. and without the local operating subsidy to show that the project is feasible, we probably will not have been in a position to secure these funds. this ends my presentation, and if you have any questions, i am available, as well as staff. supervisor farrell: thank you presentation. is there someone else?

>> i was going to invite tim dunn from mercy. >> thank you, supervisors. i am project manager for mercy housing. we really appreciate the support that the board of supervisors and the city has provided in this instance. as joan was discussing, arlington hotel is a 154-unit of building which will have 80 vacancies available actually in about -- right after labor day, to start bringing in people through the losp program. we're excited about the renovation. if anyone is interested, we may invite anyone for a tour. linton hotel is a long time resource for affordable housing in the tenderloin -- arlington hotel. it was at great risk of foreclosure several years ago,

about five years ago. the building had huge deferred maintenance issues, was seismically vulnerable, and was unable to meet operating costs. mercy housing has been working with the st. vincent society as well as the mayor's office of housing and the department of public health for about five years now to save this important resource of housing. as mentioned, the losp was a key component to this plan, and as she mentioned, with the losp, we were able to leverage $10 million of state funds through the multi-of a program, a $12 million of stimulus funds, and $840,000 of federal ahp funds. so the losp is the final part of

this long-term solution for maintaining this important resource. the losp is a great model. other immersing housing works in a lot of communities -- other mercy housing works in a lot of communities. san francisco should be very proud of this model. mercy housing also has got letters from many of our tenants who are currently beneficiaries of the losp program in our other properties. we will drop this off with the clerk. thank you very much. supervisor farrell: thank you very much. thank you for the presentation and for being here. having been briefed on this, i have no questions. colleagues, do you have questions? ok, with that, we will open it up to public comment.

are there any members of the public who wish to comment on item number three? please line up here on the side. everyone will have two minutes to speak. >> thank you, supervisors. my name is david, director of housing development for community housing partnership. chp service formerly homeless tenants at all of our buildings in san francisco, and as such, we have used the losp at a number of projects. we have five buildings that have losp contracts, to the more contact serving an additional 145 tenants for which we hope to have losp contracts in the future. this is a fantastic program. the arlington is a fantastic project, so this contract deserves our support. the federal resources available to support supportive housing are simply insufficient to meet the needs of creating projects,

creating units for homeless people in san francisco. san francisco would not be of the meet its goal of ending chronic homelessness without this program. the program also saves city money, because i supported the local operating subsidy, we're able to put people in high quality housing at a lower cost than it would be to leave the homeless. i urge you to support the local operating subsidy program and specifically to support the contract for the arlington losp. thank you very much. supervisor farrell: thank you. next. >> good morning. i am a senior project manager at the tender would -- the tenderloin in a neighborhood association. i want to give strong support of the losp than the 10-year plan to end chronic homeless is. we are a nonprofit development organization. we total about 2300 units.

we have nearly 100 formerly homeless households in the tenderloin and the mission the benefits from the availability of losp funding. we expect another 172 tenants at our latest development that will come online this fiscal year. losp is critical as a tool for the homeless in san francisco. it is able to leverage millions of state, federal, and private dollars to help people but homeless as behind the. we believe that losp makes san francisco and national leader in its approach to ending homelessness, and that is of the oil should be very proud of. we encourage you to preserve losp funds for the arlington. thank you. >> good morning, supervisors. i am from fiscal community services. we provide shelter, behavioral health services, education, employment, and senior services for homeless people in san francisco.

since 1994, we have provided supportive housing, helping people end homelessness in their own lives. today, warehousing and providing social services to 1000 formerly homeless men, women, and children at nine sites. i am here and supported the resolution before you, authorizing the execution of a 15-year losp agreement with mercy housing to provide subsidies for formerly homeless single adults at its arlington hotel. we have in place and $8.7 million losp agreement for subsidies in our bishops swing house which reopened in 2009. 134 men and women live at bishop swing. all were chronically homeless at the time of injury and most came in with physical, mental, or substance abuse challenges. our residents average annual income is just over $8,000, and without the losp assistance,

nearly all of the residence at bishop swing would remain in shelter or be on the streets. our local -- the losp evidence is san francisco's great commitment to providing effective solutions for otherwise unhoused people. this is important in times when other funding services have diminished. [bell rings] and i join my colleagues in urging you to approve the losp subsidy for to mercy housing for the benefit of the arlington residents. thank you. >> good morning, supervisors. i live in -- [unintelligible] i cannot tell you and of how good it is to have these services. and a word of change when it comes to me, -- [unintelligible] after being homeless for several years. so we needed those funding. thank you.

supervisor farrell: thank you very much. next speaker. >> hello, i am the site program director of -- [unintelligible] i am here to support the losp program. my program was one of the recipients of the funding. we were able to leverage the funds that were otherwise not available to keep us open in the mission. we house about 87% spanish multilingual speakers, of which all of our staff are bilingual. without this subsidy, we would not be able to give culturally- all the services to our tenants. 48% of our tenants are zero income, and the average income is less than $2,500 a year. on behalf of our tenants, our agency, we're here to give strong support to the losp program. thank you. supervisor farrell: thank you very much. are there any other members of

the public that wish to comment? see none, public comment is closed. colleagues, we had this item before us. i would like to entertain a motion to refer this item to the full board of the committee report with positive recommendation. motion made by president chiu. we take that without objection. item number 3. mr. clerk, can you call item number four, please? >> item number four, hearing for the city's external auditors to present a comprehensive and of financial report, segel audit, and their management letters, if any, related to the city audit for fiscal year ending june 30, 2011, presenting their audit plans for fiscal year 2011-2012 as required under charter section 9.117. >> good morning. i am with the comptroller's office, and i am here to introduce the two presenters.

the audit partner from cmacias gini & o'connell. she will have the report. we have no current management letter comments, but we have a couple of prior year comments that are partially implemented that she will speak to. and then results of the single audit. she will also present the audit for the 630-12 audit. and a member from kpmg llp will present the results of the segel audit for the airport, and she will also present the results of the audit planning for the next year. i would like to introduce cindy first. supervisor farrell: thank you very much. supervisor wiener? supervisor wiener: i just want to say that those people that are here for items one and two, thank you very much. we plan to get to those pretty

quickly. >> good morning. thank you for inviting us to discuss this city's audits. the deliverables issued by mgo included in your package include the fiscal year 2011 with the government bought it and oversight committee. the segel audit report and the audit plan for fiscal year 2012. the me first start with the report to the government audit and oversight committee. this report includes the communication we as auditors are required to present to the oversight body. in addition, the city does not have a current-year recommendation deemed to be control deficiencies pertaining to the financial statement audit. that is noted on page 5. the report also includes a summary status of prior year recommendations. the city fully implemented all

of these recommendations except the three related to the port of san francisco, which are on pages 5 and 6. the three include the disaster recovery plan, information systems, and business continuity. physical inventory of capital assets and means of capital asset records. and controls over materials and supplies. the comment that was not fully implemented as it relates to the generosity includes the capital asset data base. the second deliverable we have is the single audit report. this report was updated to the federal clearing house data base and includes the city's basic financial statements, along with the information related to the city's federal expenditures for fiscal year 2011. this city expended $560.5 million of federal awards in its

fiscal year 2011, as noted on page 165. of these awards, we performed tests on 21 of these programs that were deemed to be major federal programs, and that represented over 70% of the total federal expenditures. during our audit, we identified internal control findings related to the foster care program and a report on compliance was unqualified for all programs except for the subrecipient monitoring requirements of the foster care program. two findings related to the foster care program our findings number 2011-1, subrecipient monitoring, and the required monitoring was not performed. the department misinterpreted the monitoring requirements, and as such did not have these organizations identifying as being required to be monitored.

and finding 2011-2, which relates to allowable costs. the indirect cost rate used for the fiscal year 2011 claim was based on an outdated cost proposal from fiscal year 2002. the third report we included was the 2011-2012 audit plan. the scope of our engagement is found on page 3 of that audit plan, and it includes the general city's audit, the retirement system, the former redevelop the agency, two hospitals. we will have six teams augmented with professionals from two small local businesses assisting us with those audits. included in the audit plan are a summary of upcoming accounting

decisions for the upcoming years, and those are found on pages 17 through 19 of the report. fiscal year 2012 is a relatively quiet year for new accounting standard implementations. this will be helpful in that there will be submitted changes in accounting and disclosures related to the dissolution of the city's former rebel the agency and the creation of its successor agency. most of these new accounting standards are technical in nature. however, there two summarized on page 19 that will require time for the city to plan and to evaluate its potential impacts, and those are statement number 67, financial reporting for pension plans, and statement number 68, accounting and financial reporting for pensions. those standards will be required to be implemented during fiscal years 2014 and 2015. with that, i would like to turn

the presentation over to -- supervisor farrell: thank you, appreciated. >> good morning. i am with kpmg llp. i will give you a brief overview of the results from the audits in 2012 and then in 2012. we are did the transportation agency, public utilities commission, international airport, and health services commission. two have single audits. one, mta, as $170 million in expenditures for 2011. there were no findings there, and we had an unqualified opinion noncompliance. the international airport as a little over $23 million in federal funds. we issued an unqualified opinion on compliance, but we did had -- have significant deficiencies in internal controls. there were four findings in the current year related to cash

management, allowable costs, and reporting. we believe the city is addressing those currently. there were four findings from the prior year, and our prior recommendations were implemented. any questions on the prior year? and our audit plan for 2012, we will again audit the mta, cuc, sfo, and health services. all the reports we are preparing for the current year are listed on page 15 of the handout that you have from kpmg of our audit plan. we are including all of our required to medications of our responsibilities and the city's responsibilities in our audit plan here. we are independent of the city for the year ending 2012. our detailed audit plans are the same. the timetable, our work began in may and will end in january 2013, with all the reports being issued by the end of october of this year.

all the financial statement reports included in the capital. any questions? supervisor farrell: colleagues, and questions for kpmg? >> thank you. supervisor farrell: thanks very much. >> good morning again. we also have department zero representatives available here from any department that had funding. if you like to hear from them. >> i know is briefed and my office was briefed. i think both the auditors for coming today. i am ok. colleagues -- i know we have a lot of people waiting for other things and we want to be efficient. do you have any questions? ok, thank you. >> thank you very much. supervisor farrell: ok. all right, with that, colleagues, this is a hearing -- we're going to entertain a motion to table the hearing

before that, i would like to take any public comment. any members of the public who wish to comment on item number four? ok, seeing none, public comment is closed. colleagues, can we take a motion to table this hearing? motion by president chiu. we can do that without objection. mr. clerk, can we call item number one, please? >> item number one, -- supervisor farrell: number one and two together. "saddam, ordinance amending the san francisco please go to elevate the permit requirements and other local regulation of second and dealers and antique dealers. item two, or in its amending the san francisco police code to exempt dogs on a leash from the prohibition against fastening an animal to a lamppost, hydrant, or growing tree. supervisor farrell: thank you. we have the sponsor of both items number one and number two, who is sitting on the committee

today, supervisor wiener. supervisor wiener: thank you very much. today we have two pieces of legislation before us. the first repeals a number of very antiquated provisions from the police code, including most of them from the 1930's, setting the rates for carrying luggage from different parts of the town to other parts of town usually 50 cents or $1. repealing the requirement of a travel agent who sells an airline ticket posting security bond with the city. that was obviously done in the days when we did not have our current way of buying airline tickets. a section making it a misdemeanor for a moving company to notify a property owner before moving -- before moving items for a tenant but also repeal the code section that makes it a misdemeanor for dip -- for business that serves food

to and by someone other than the business owners to sell food on the policies, also known as the -- finally, rippling and law that makes it a misdemeanor to tie the dog up to a light pole even if only for a few moments while the dog owner goes into a store. that kind of conduct is specifically allowed by the california health and safety code, but it is technically illegal in san francisco. the second piece of legislation is a repeal of the this city's second hand and dealer license in the police go. this legislation focuses on the lengthy and costly, and at times, abusive process license requirement for secondhand dealers such as antiques stores, used bookstores, and vendor clothing shops. the legislation supports the very type of unique businesses then make your neighborhood

commercial corridors vibrant and interesting places. we have spent a lot of time arguing about formula retail in the city and the need to have unique and interesting stores in our neighborhood commercial corridors. and a secondhand in vintage store is frequently exactly that. interesting and unique stores, the kind we need and want in our neighborhoods so that we do not get taken over completely by formula retail. this is pro-small business. like the previous legislation i mentioned, it has been supported unanimously and enthusiastically by the small business commission. this legislation removes the second-hand dealer provisions from the police code, allowing used furniture dealers, used book dealers, vintage clothing dealers to be considered and treated the same under our rules as businesses that are selling new furniture or boats or clothing, for example. currently, these vintage and keep -- antique stores are

required to have a special permit from the police department which requires a payment that can end up costing as much as $1,500 or even $2,000. it requires a small business owners get fingerprinted at the hall of justice and at a criminal background check is drawn. many liken this to being treated like a criminal. even like getting a mug shot. it requires the salesperson at each of these neighborhood stores to write down each and every sale, describing the item, describing the person by name, appearance, and other manners, and reporting that information to the chief of police every single day. and you imagine if you went into one of these stores as a customer, what you would say if you're asked this information from the shop owner when trying to buy a vintage. blue jeans or use book? this is and the many of our small business constituents asking for even before i took office. i was being asked about this, because the police department

had started to enforce this. in fact, business owners along valencia's street received letters threatening them with a conviction for a misdemeanor, but i never knew anything about it. we have heard from businesses all over the city, and the south of market area, the castro, mission, north beach, in the marina. in many cases, these businesses have been in operation for years not knowing that this requirement could have been flat to them when they originally got the shops. there is a letter talking about being charged with a misdemeanor. we met with the chief of police and others in the department several times. before i introduce the legislation, i sent a letter to the chief asking if he had any concerns. he indicated that it was fine to proceed. with that, colleagues, i want to ask that the committee support the legislation, and i also just

want to know that in talking to the police department, there has been in discussion about very specific kinds of theft that can result in something making its way to a second-hand store. i want to stress that there are other sections the cover these concerns. for example, metal theft is this again concern right now, but any business that deals with recycled metal as to receive a junk permit. this does not affect that. there is a pawn shop section. any concerns covered by the punch of regulation. there is a separate fire our license. of course, all the provisions of the penal code related to the merchandising of stolen goods is dealt with by the penal codes. colleagues, with that,